“Some participants also pointed out that it might be appropriate to start downsizing the Fed’s balance sheet relatively earlier after the start of the federal funds rate hike.”
The minutes offered more details on the Fed’s shift to tougher monetary policy last month. Policymakers agreed to accelerate the end of its pandemic-era bond-buying program and issued forecasts anticipating three quarter-percentage-point rate hikes during 2022.
The minutes showed that the Fed was not only debating an initial rate hike, but also whether to use a second lever to curb inflation by allowing its holdings of US Treasuries and mortgage-backed securities to fall.
The December meeting took place when coronavirus case counts had started to rise due to the spread of the omicron variant.
Infections have skyrocketed since then, and there have yet to be comments from senior Fed officials indicating whether the changing health situation has altered their views on proper monetary policy.
Fed Chairman Jerome Powell will appear before the Senate Banking Committee next week for a hearing on his nomination for a second four-year term as head of the central bank, and is likely to update his views on the economy. at that moment.
